Kuda raises $25M in Series A, set to become the neobank for ‘every African on the Planet’

With more innovations and strategic ideas springing up among fintech startups, digital banks are strongly advancing in the banking industry, swaying customers away from traditional banking as they provide better modern and user-friendly tools.

Kuda, a trailblazer in the digital banking sector recently announced the success of a $25 million Series A funding. Its goal is to provide a reliable modern banking service for Africans and Africans in the diaspora, according to TechCrunch.

The Series A funding was led by Valar Ventures, a firm co-founded and backed by Peter Thiel, alongside Target Global and other unnamed participant investors. This would be the first time Valar would invest in an African startup. Some of its previous investments are TransferWise, N26, Stash, and most recently, BlockFi and BitPanda.

“Nigeria is at a tipping point in the adoption of digital banking,” said Andrew McCormack, a general partner and co-founder at Valar. “With the rapidly growing, youthful population who are open to new financial alternatives, Kuda is well-positioned to benefit and will transform the landscape of African banking. We are excited to lead their Series A and continue on the journey alongside Kuda.”

Kuda’s services include consumer savings and spending, and it recently introduced overdrafts for individuals. Co-founder and CEO Babs Ogundeyi said in an interview that the plan is to use the funds to expand its operations and credit offerings, as well as to build out services for businesses, and to move into more markets.

Four months ago, Kuda closed a seed round of $10 million led by Target Global, making it the largest-ever seed round raised by an African startup. At the time, Kuda had about 300,000 registered customers. That number has doubled to 650,000 within a short time.

“In November we were doing about $500 million in truncations per month for services like bill payments, card transactions and phone top-ups,” Ogundeyi said. “We closed February at $2.2 billion.”

In February, Kuda closed $2.2 billion in transactions, according to Ogundeyi. As the company plans expansion, it will most likely extend its services to Africans in the U.K., and possibly the U.S. He said while the service is live in only Nigeria for now, the “vision is still to serve all Africans in Africa as well as outside of it.” Kuda already has a headquarters in London, which has been estimated to be the home of more than 1 million Nigerian immigrants and people of Nigerian descent.

Unlike many other digital banking platforms in Nigeria, Kuda has a microfinance banking license issued by the Nigerian central bank. With this license, the company can offer money management services, manage payments and transfers, offer loans and credit, and issue debit cards in partnership with Visa and Mastercard.

Although Kuda operates fully digital, it has partnerships with traditional banks including Zenith Bank, Access Bank, and Guarantee Trust Bank (GTB), for customers who wish to make physical withdrawals and deposits.